It is important for organizations to address its knowledge capabilities through the knowledge audit process. The GPBI Company, the world leading manufacturer of batteries, developed a knowledge audit with IC reporting that covered only two project plants of its business. Its knowledge audit tool, STOCKS should be developed to apply the video conferencing to save time, enhance the audit system, and enable the system to be applied to all of the workers within the organization. The company relations with its stakeholders is a poor relation, which reflects lack of relational capital with customers and suppliers. GPBI do not pay much attention to certification and regulatory bodies, which might result in the risk of regulatory actions towards the company. The current system requires regular update, as the IC indicators and the knowledge inventory constantly changes and the VAQMP processes need to reflect the changes in the knowledge assets or knowledge workers (Chi & Lee, 2011). As the intellectual capital (IC) is considered the aggregation of the intellectual assets of the organization. It consists of the human capital, structural capital, and the relational capital (Vale et al., 2016). IC focuses on the intangible capabilities, which is considered a valuable organizational resource that creates value to the organization and increase its competitiveness.
The following section discusses the knowledge audit of IC reporting project adopted by the GPBI Company, its background, objectives, strategies, and stakeholders. Then it analyses the business context, the current business processes and problems, the proposed new system, and method of evaluation for the users to follow while using the system.
Project background, objectives and strategies
The GPBI, is among the world leading battery manufacturing companies. It provides the leading manufacturers and battery companies with battery products, also, it has its own brand name in the retail market. The company's production facilities operate in five Asian cities and countries, and it has 16 offices of trading, and marketing in Asia, America, and Europe. Knowledge and quality management processes are concerned with quality improvements and prevention. The quality assurance departments in the headquarters and the affiliates manage knowledge through Value Added Quality Management Processes (VAQMP). They depend on the knowledge audit to manage quality. Two of the GPBI production plants named DGCB and DGYF, were selected to identify the knowledge asset and flows of the VAQMO through STOCKS audit system. The STOCKS system was modified to enable face to face interviews to collect audit data instead of the workshop. The modified STOCKS compose of nine phases, the main challenge in the project is that the interviewer should ask questions in an intelligent way that guides the participants to express his tacit knowledge in order to provide complete and relevant information. The interviews covered six key processes in each plant, 29 participants were interviewed, and the STOCKS forms were filled.
The result of the project produced an inventory of knowledge assets, which is ready to be used in prioritizing the assets. Explicit and tacit knowledge was created, and it is ready to be located, described, and classified. The amount of tacit knowledge assets is higher than the amount of the explicit knowledge, which indicates that this knowledge will be lost if the knowledge owners left the organization (Chi & Lee, 2011). It is important to the company to keep the knowledge assets database updated to be able to add more knowledge and make necessary changes. Also, it is important to cover the entire plants operating in different locations, not only the two project plans.
Business context and business case
Modern organizations that concern with knowledge and innovation organize around projects. The success of the project is a knowledge-related issue. The organizational competitive performance is a function of its knowledge ability. It is important for organizations to realize the knowledge related assets they have, and the need to develop the level of knowledge to succeed (Handzic et al., 2016). The intellectual capital, and the knowledge management are important to organizations in the following manner:
- The intellectual capital (IC): It consists of human, relational, and structural capital. The value is added to the organization through utilizing its knowledge assets, different combinations of knowledge assets indicate the most suitable type of knowledge that suites the organization to fulfill its particular needs (Handzic et al., 2016). The human capital, refers to the employees with higher education. The relational capital, refers to the organizational external collaboration with its stakeholders (Akhavan & Khosravian, 2016). The structural capital, refers to the capabilities, methods, and processes that exist within the organization's borders, for example, the databases, infrastructure, and scientific publications (Ortiz et al., 2017). GPBI has to leverage the three components of the IC to maintain its competitiveness.
- Knowledge management (KM): Mainly focuses on the dynamic flow of knowledge, by this it differ from the IC, which focuses on the static stock of knowledge.
Accordingly, the selection of the knowledge strategy requires a balance between the personalization and codification (Handzic et al., 2016). GPBI should define the combination of knowledge assets that best suites its goals, also it needs to focus on knowledge management to guarantee the dynamic flow of knowledge.
There are two different approaches for the source of the organizational competitive advantage, the first approach analyzes the IC from the resource based view (RBV), as the IC represents the resource that could be acquired by the organization and create a competitive advantage. The second approach analyzes knowledge as a source of organizational competitive advantage from the knowledge based view (KBV) (Lentju?enkova & Lapina, 2016). The real organizational competitiveness is sourced from its intangible resources, considering the results of the analysis of the two projects of GPBI, it is obvious that the amount of tacit knowledge is greater than the amount of the explicit knowledge, which means that GPBI should depend on KM more than IC.
The organizational external relations with its stakeholders represent its RC, which depends mainly on the human capital. It could be considered as a result of the activities of the human resource that aims at building and maintaining the relationships between the organization and its stakeholders. Both direct and indirect relationships are considered with the external environment. Customers represent the most important stakeholder to any organization, as they are the main driver for rvenues (Bianchi et al., 2016). The suppliers, and competitors are considered among the sources of intangible assets which constitute the RC of the organization (Cegarra-Navarro et al., 2016). According to Hosseini & Saleh (2016), organizations can measure the RC in relation to the organizational performance. GPBI could apply the same methodology to measure the relationship between the elements of its RC, represented in the tacit knowledge of its stakeholders, and its performance to be able to decide the degree of significance of this relationship. The quantitative assessment could be used in the long term to explain differences in the profitability of the company.
Statement of current business processes and problems
The current business process in GPBI, is heavily reliable on the intangible knowledge which is implicit. Accordingly, if these workers with intangible knowledge decided to leave the company, a big problem will happen represented in the lack or loss of knowledge. Also, the company relations with its stakeholders is a poor relation, which reflects lack of relational capital with customers and suppliers. GPBI do not pay much attention to certification and regulatory bodies, this might result in the risk of regulatory actions towards the company. Also, it is important to the company to provide training to knowledge auditors to be able to extend the IC knowledge audit research to the company as a whole.
The current knowledge audit system with IC reporting requires regular updates, as the IC indicators and the knowledge inventory constantly change. The system only displays a snapshot of the main VAQMP processes, the changes in the knowledge assets or knowledge workers should be reflected in the system. Linking the current system with the HR system will guarantee that the knowledge audit with IC reporting system is updated. The knowledge audit tool, STOCKS should apply the video conferencing to save time, enhance the audit system, and enable the system to be applied to all of the workers in the organization (Chi & Lee, 2011). This bottom-up approach is complementary with the top-down approach of IC assessment tools and a new system is required to ensure that the IC reporting is up to date to enable the company to create value.
Proposed new system
Introducing a new business model is considered part of the organizational strategy, the model should consist of the customer segments, channels, value proposition, main partnerships, and cost structure. Accordingly, the business model should link the value capture and value creation of the organization activities. The organization should focus on the type of the value to be delivered, and to whom it would be delivered. Depending on the organization's vision, the new system should be built to fulfill the desired goals (Philipson, 2016). As GPBI depends on STOCKS as a knowledge audit tool, it has to codify the knowledge sources, experiences, skills, documents, and its recipients. The Information Communication Technology (ICT) allows customization of products (Yip et al., 2015). To ensure that the knowledge audit system is updated, STOCKS has to include the information and culture assessment, priority of the core processes, reporting of the knowledge audit, recommendations of the knowledge management strategies, and continuous re-auditing (Che et al., 2012). Accordingly, the company can modify its face to face interview technique and depend on the video conferencing to achieve its goal in interviewing its workers in its different affiliates and offices around the world. Also, it needs to secure its audit process in order to keep its inventory of knowledge safe, regular updates of the STOCKS tool is recommended.
Knowledge map is used to provide a description of the knowledge used in the process, and the way the knowledge flows around the process. It determines the areas with similar knowledge across multiple processes, or the knowledge infrastructure, and the ways of knowledge dissemination (Nenonen et al., 2014). Knowledge maps allow the organization to articulate the important knowledge and create relationships (Vitulli et al., 2014). It is highly important to each organization interested in IC management to draw the required knowledge maps to monitor the knowledge gaps and transfer the necessary knowledge to fill these gaps.
A knowledge map could be identified according to Park et al. (2015), as follows:
- A visualization tool used by the organization to analyze the knowledge portfolio and enable the knowledge manger to identify the organizational competencies.
- It represents a mental diagram that classifies the complex ideas in a logical sequence.
- Knowledge indicators are classified according to their spatial arrangement.
The new knowledge audit with IC reporting proposed for GPBI Company, should consider the company's ability to build, integrate, and reconfigure the internal and external capabilities to be responsive to the environmental changes. The company competency results from its ability to build its dynamic capabilities to adapt to the environmental changes (Singh & Rao, 2016). The success of the proposed knowledge audit system is a function of its ability to facilitate the interaction between the user and the information. Knowledge mapping provides the necessary visualization to give insights to the large amount of information (Mutschke et al., 2013). GPBI should depend on experts in knowledge mapping to reflect the visualizations of the content, especially when the company applies the workshops or video conferencing techniques rather than the face to face interviews in gathering filling the audit forms.
Method of evaluation for the users to follow while using the system
In order to utilize the usage of the knowledge audit system, users are recommended to follow important steps according to Alexandra et al. (2014), as follows
- Users should realize the correlation between the business strategy, and the KM strategy in order to focus their learning on the main knowledge issues that add value to the business.
- Users should attend the explanatory session provided by the knowledge audit to fully understand the system components, functions, usability, and to get the management support.
- They have to ensure that the knowledge audit survey is formulated correctly, used the company terminology, and that the system analyzes the business knowledge requirements.
- Auditing the statistical method used in the data analysis to ensure that the knowledge audit reports reflect the primary data that was collected.
The GPBI Company depends on the knowledge audit to manage quality within the company. It is important to the company to keep the knowledge assets database updated to be able to add more knowledge and make necessary changes. Also, it is important to cover the entire plants operating in different locations, not only the two project plans.
GPBI has to leverage the three components of the IC to maintain its competitiveness, including the human capital, structural capital, and the relational capital. The real organizational competitiveness is sourced from its intangible resources, considering the results of the analysis of the two projects of GPBI, it is obvious that the amount of tacit knowledge is greater than the amount of the explicit knowledge, which means that GPBI should depend on KM more than IC.
The new knowledge audit system with IC reporting proposed for GPBI Company, should consider the company's ability to build, integrate, and reconfigure the internal and external capabilities to be responsive to the environmental changes. The company competency results from its ability to build its dynamic capabilities to be able to adapt to the environmental changes. GPBI should depend on experts in knowledge mapping to reflect the visualizations of the content, especially when the company applies the workshops or video conferencing techniques rather than the face to face interviews in gathering filling the audit forms.
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